Welcome to the Opera Limited First Quarter, 2022, Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today's call is being recorded. [Operator Instructions]. I would now like to turn the call over to your speaker today, Matt Wolfson, Head of Investor Relations. Please, go ahead.

Thank you for joining us. With me today, I have our co-CEO, Song Lin and our CFO, Frode Jacobsen. Before I hand over the call to Song Lin, I would like to remind everyone that in the conference call today, the company will be making statements about its future results and expectations which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Such statements are based on current expectations and how we perceive the current economic environment and are inherently subject to economic, competitive, and other uncertainties and contingencies beyond the control of management. You should be cautioned that these statements are not guarantees of future performance. You may refer to the safe harbor statement in the company's earnings results for details. Our commentary today will also include non-IFRS financial measures including adjusted EBITDA which are different from our consolidated financial statements that are prepared and presented based on IFRS. We believe that the use of our non-IFRS financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation or as a substitute for financial information prepared in accordance with IFRS. We have also posted and audited quarterly historical financial results of Opera on our Investor Relations website. We'll be live tweeting highlights from the call @InvestorOpera so please follow along there during the call and in the future. With that, let me turn the conference call over to co-CEO Song Lin, who will cover our operational highlights and strategy and then Frode who will discuss our financials and expectations going forward. So, thanks, Matt. So thank you, everyone for joining us today. We're excited to report another strong quarter that come in above expectations both in terms of revenue and adjusted…

Thanks, Song Lin. Starting with revenue which came in at $71.6 million for the quarter. This was ahead of our expectations and the previously issued $67 million to $70 million guidance. And of course, it was particularly strong in light of the headwinds associated with the war in Ukraine and how that in turn affects regional monetization and has strengthened the U.S. dollar relative to other currencies in which we ultimately generate most of our revenue. We estimate that the war resulted in a $2 million revenue headwind in the first quarter predominantly due to changes in exchange rates as the underlying impacts have less time to materialize and only affected the later parts of the quarter. The reason we still exceeded guidance in Q1 and are able to maintain our previous guidance for the year as a whole is the core machinery of Opera's business performing ahead of expectations. Operational expenses came in largely according to expectations resulting in adjusted EBITDA of $7.3 million, also exceeding the top of our guidance range. Recently, you have seen us divest our former ownership stakes in both Nanobank and StarMaker, allowing us to realize about 70 million of value creation or over a 110 million in the aggregate when including our partial sale in [Indiscernible] last year. A common question I received as what we intend to do with the cash ahead of collecting any proceeds from the sales of Nanobank in Star maker, our cash and marketable securities already stands at $182 million taking together with the $215 million we will collect them the sales. This adds up to nearly $400 million, which has indeed a significant amount relative to our current market cap. In addition, we still hold a fixed 0.44% ownership stake in hold pay and in line with…

[Operator Instructions]. We'll take our first question from Lance Vitanza with Cowen.

Hi, guys. Thanks and congratulations on a strong quarter. I guess I have 2 basic questions for you. The first is on the Russia-Ukraine situation in beyond the human tragedy. I'm just wondering if you could help us think through the revenue implications in a little bit more granularity and I appreciate the guidance that you gave for sort of the total impact. But on the one hand, I just want to try to understand how this is playing out on the one hand, we have presumably displaced Ukrainians on the other hand, we have Russian population that is presumably economically bankrupt due to global sanctions. And then there is the currency or exchange rate impact. I suppose it's the latter 2 problems that are more relevant from the standpoint of Opera's business, is that right? And could you quantify or maybe just talk in percentage terms how each of these specific issues kind of add up to the revenue drag numbers that you talked about during your prepared remarks.

Hey, Lance, Frode here. So you are right. In the first quarter, as I mentioned, that was essentially a foreign currency translation just from the strengthening of the U.S. dollar. And as best as we can estimate, looking at the remainder of the year, the FX impact and let's say the underlying business impact, it will be about the same size. So I mentioned about $12 million for the remainder of the year, about 1/2 and 1/2 FX versus business impact.

Okay. So are you still doing business in Russia and are there any thoughts of suspending operations there until the conflict is resolved? In other words, until Russia rejoins the global community?

Song can probably also chime in here. We do continue to offer our products in Russia. We've spent a lot of time thinking about it, obviously, it's very close to our home in terms of being in the region Polish, Swedish, European footprint but -- so it became what's the right thing to do kind of position and limiting information both availability seems like the wrong step to take. So that's how we thought about it.

That -- you've given us a base case in your outlook for Q2 and for the full year, how should we think about a realistic gown case? Is the stress test to simply take the 10% of the revenues that you've said come from the region, is the stress test to simply take that revenue out of the equation full stop or if we were to that would there be any cost removal that would go away or is that too conservative way to look at? And again, I'm trying to get to something that if things get worse, as opposed to meet your forecast.

I mean, we do build into our forecast that things will get worse right? So correct as you say, there was an opening expectation of representing around 10% of our revenue this year. Probably with a 25% to 30% margin on that, because we do, of course also invest in our user base across both European and Eastern European markets. So, there's costs associated with the 2 but as of now, we don't see the scenario going to zero unfold. So, we consider what we presented today as the most realistic expectation.

Okay, thanks. Let me turn to something a little bit more hopeful. The divestitures of Nanobank and StarMaker and the partial monetization of OPay, you've obviously gone a long way towards streamlining the business, streamlining the story and obviously you talked about how you're classifying the remaining OPay stake, it's held for sale. Could you discuss maybe the timeline for potential monetization of that, the remaining stake and remind us what's the book value of that stake? I think you might have called it out in your prepared remarks but I missed it.

To begin with the latter, I think it's about $84, $85 million that we have on our books from OPay. We can double check later. In terms of timeline when we classify something as held for sale, the implicit expectation is within 12 months. So within within 2022 is the implicit expectation.

And then just lastly, for me, then you started to sort of walk through the math on the call. I was actually going to be my question, but if I start with a $600 million market recap. There's a 115 million ADS's at about five 20 - ish share. I get to a 600 million at each market cap. I back out the cash, I back out the PV. If I even just if I use the PV of the steak right, as opposed to the sales rather that you saw. And then I take out the book value, right? Of the OPay stake. I'm getting to like about $150 million implied for valuation for the browser business. And I'm just am I doing that correctly? I mean, that just seems too low or wondering if you have any comments.

As far we're trading at like point 3, 4 point 3%, 4% revenue and we are like 1.5 times adjusted EBITDA of 2022, something like that, 1.6 or 1.7 maybe.

I mean, at the rate you're going, your EBITDA margin is going to be higher than your revenue multiple.

[Indiscernible].

Yeah, thanks guys for taking the questions. I'll get back in queue.

Sure. Thanks, Lance.

Thank you. Our next question will come from Mark Argentino with Lake Street.

Hey, good morning, guys. Just a quick question on -- we've [Indiscernible] a little bit with the capitalization and the strategy going forward. So you have the model, and then you have the core browser business, and then you'd leverage that in other technology areas. Just going forward, how do you think about deploying capital and the strategy? You anticipated a similar type of strategy. It could be investing [Indiscernible] or maybe doing something more substantial and buying larger, more established businesses.

Hey, Mark. It is a broad question to comment on it. I think the investments that we had that we [Indiscernible] and Opera we have left, we are proud of them because like you mentioned, to a great deal, we were able to create that value for Opera by participating in these companies, co-founding, etc. And so it is a good example of how the browser business that we have is a strategic asset that we can launch products and services from. Of course, we focus mostly on what we do internally with Opera News and our gaming initiatives but these were some specific opportunities we had in earlier years that have done well for us. I think when we look ahead, we are definitely more focused on what we can create internally and as part of Opera and I don't see the same situations of participating in the launch of separate companies. I don't have an indication that there are opportunities in that space right now so it's more of an internal focus.

Great. And just one follow-up in terms of as we monetizing [Indiscernible]. And so that incremental of $211 million and so. Do you need a tax effect that at all or is that actual that -- that actually you guys should receive after you collect all the proceeds?

There's no tax on that. So these are entities, essentially shares that we sold, which is not a taxable gain.

Great. I appreciate it. We've been locked, and I know it’s been a difficult environment for you guys, just given your exposure to [Indiscernible] actually going forward.

Thank you.

[Operator Instructions]. Our next question will come from Alicia Yap with Citibank.

Hi. Thank you. Good evening or good morning management. Thanks for taking my question and also congrats on the solid results despite having some headwinds in Europe. I have a couple of questions. First of all, I think you mentioned about impact from Russia came in, also we reiterate the guidance and all that. But I'm just wondering, has there been any impact on other advertisers [Indiscernible] especially the advertisers that are based in Europe soon, like the region. And will they be -- actually become more cautious on spending their dollars? So that's the first question. And then second question I also wanted to follow up on the use of the cash, with the incoming cash that you have received or will receive. How should we think about any future plans on the cash use? Would there be any special cash dividend or would you plan on some acquisition targets that fit into your search and advertising business? And then maybe as you expand into the GX browser which you're doing very well, will you also be interested in acquiring some game studio, for example? Thank you.

Yes. Sure. So it's Song Lin and I'll also try to answer a bit, so I guess for your first question all advertiser sentiments, I guess is what we see is that -- I think in general we feel the advertisers in Europe are still quite strong. The way we see it. The only impact is more towards maybe the exchange rates that of course, with the Europe actually being a bit weaker compared with U.S.. And then if you mail that U.S. of course, that's more the impact which we are talking about. But yes, high level, we feel that do what we can see, it's still going strong and that's what indication of why we have keeps to go, the strong and exceeding guidance. And we also keeps all for your guidance. All those that we have to keep a closer look to see how that changes and be saying, yeah, you're either reduce, so that will ever general high level over the Beijing. And then I guess Frode has already pretty much answer the bit about the cash path. I think to us the importance is to demonstrate that these are passive investment that has to be able to bring lapse good value. And then we're also able to bring that into cash. So I guess it's more I can maybe clear demonstration of the walk that I'd be down which I'm bringing value to the to the company. And so hopefully it will be more easier for the investment community to be able to see it. Way -- like other than that, I think it's fair to say, this will give us more flexibility to be able to invest into a more strategy stuff that the we are focusing on online game or gaming for instance. I guess we wouldn't mind if there is a potential target or anything to acquire, but we don't have anything. And this end and we're just happy that it give us some flexibility.

Thank you, Song. I understand, especially at this moment, you may not have -- identified a specific target, but I guess I'm just wondering maybe you can help us from a little bit what you're thinking about the strategy or what -- if you look at your business, after kind of, like, adjusting all these kind of -- the non-core and then focusing on the search and the advertising, as we look into the next few years, what are things that you feel your business needs to be further strengthened, right?

Okay. So -- yeah.

And then, also the region that you feel you wanted to explore into or you have opportunity to explore into. Yeah. Thank you.

So yes. Sure. Yes. So it's a very relevant question. So I would say a high level possible our GX gaming field orders there is growing very fast and is also in line with perhaps offers overall strategy to provide postmates the browser for particular segments and initiatives gamers. So I'm quite certain that they will continue to deliver and expand on the gaming sector both in terms of growing, our continues to grow our GX user base, but also in growing our gaming platform. And also, I'll give you a [Indiscernible] and if along the way we have to work with more gaming partners or getting company as those studios and provide better economies way will do it. So, I think we're actually quite proud and also confident that we're able to make a difference. That like yes, I think you will see probably more announcements product wise, [Indiscernible] so they don't have this year. And then I think on top of that, it's more like something a like maybe we could almost say continuation obviously strategy that we feel they're similar verticals that we could make a difference, we mentioned Web3 for instance, we do getting there, we think it can be passed as important as gaming, and, or even more, right? So, there's a huge potential than we will also invest our [Indiscernible] vessels into it, in end of the day where our tech company, we have very good in tech, not really other. So, I think hopefully, we should be able to also create some of those similar, very attractive, customized products, which will be appealing to the end-users. So, I think this is really what we are thinking about. We have not really spent our time on thinking about the acquisition or [Indiscernible]. That's what I mean. And because to us it's -- yeah, it's very important we have to win by our technology, and as the rest, of course, if there's some good candidate. Like the case when we buy it -- when we bought -- when we have bought game maker engines, that of course, if there will be a company, you'd -- probably we should buy. We should do it, but that's not the focus, I guess. The focus is still to win by technology, and by innovation.

I see. Okay. Thank you, Song.

Sure. Thank you.

Thank you. This concludes today's Q&A. I would now like to turn the call back over to Song Lin for closing remarks.

Sure. So again, thank you again for joining us today. It's just an exciting time for Opera. As always, I think we were able to demonstrate that our core browser is good business to get always all content and the gaming initiatives that integrates and ways -- even more numerous growths and [Indiscernible] still to come. And now I think we were able to also demonstrate we have strong cash balance and also good visibility now about those cash payments from our divestitures, which will give us much more visibility about our access trends at a company. So way, we hope we will continue to deliver above expectations. So you all appreciate your time and we way look forward to speaking with you again in the future.

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.